Scoreboard: Blame it on Rio

Shares of Brazilian companies trading in the US tumbled in response to the results of the presidential election, while energy shares were hit by another fall in oil prices.

In the US, pending home sales rose by 0.3 per cent in September after falling by 1 per cent in August. US building permits were revised higher to a lift of 2.8 per cent in September (previously 1.5 per cent). The Markit "flash" service sector PMI slipped from 58.9 to 57.3 in October -- the lowest result since April. 

European shares fell on Monday as investors locked in gains following a drop in German business sentiment. The IFO business climate index fell from 104.7 to 103.2. The European Central Bank stress tests showed that 25 out of 130 banks failed ECB capital tests late last year, but most have managed to repair their finances. The FTSEurofirst 300 index closed down 0.6 per cent. The UK FTSE lost 0.4 per cent and the German Dax fell by 1 per cent. And Australia's major miners were lower in London trade with shares in BHP Billiton down by 1.0 per cent while Rio Tinto lost 0.8 per cent.

US sharemarkets were mixed as energy stocks fell in response to the lower oil price. The S&P Energy sector lost 2.2 per cent after Nymex crude dipped below $US80 a barrel. Shares of Brazilian companies trading in the US fell in response to the re-election of President Rousseff. Petrobras lost 14.1 per cent while Vale lost 6.5 per cent. The Dow Jones rose by almost 13 points or 0.1 per cent with the S&P 500 index down by 0.2 per cent while the Nasdaq rose by 2 points or 0.1 per cent. 

US treasury rose modestly on Monday (yields lower). Weak economic data and the steep drop in Brazil's stock market following the re-election of the incumbent leftist President Rousseff supported safe-haven demand. US two-year yields were down by 2 points to 0.382 per cent while US 10-year yields were down by 1 point to 2.26 per cent.

Major currencies were mixed against the greenback over European and US sessions on Monday. The Euro rose from lows near $US1.2665 to highs near $US1.2720, ending US trade near $US1.2705. The Aussie dollar fell from highs near US88.15c to lows near US87.85c before settling and ending the US session near US88.00c. And the Japanese yen held between ¥108.10 per US dollar and ¥107.60, ending US trade near ¥107.75.

World oil prices eased on Monday in choppy trade. Broker downgrades for oil and weak economic data kept prices under pressure. Brent crude fell by US75c to $US85.38 a barrel while the US Nymex crude price fell below $US80 a barrel to a 28-month low before recovering to close down US1c to $US81 a barrel.

Base metal prices were mostly higher on the London Metal Exchange on Monday with the exception of nickel (down 1.5 per cent). Other metals rose between 0.6 per cent-0.9 per cent. Gold fell on Monday with the Comex gold futures quote down by $US2.50 an ounce or 0.2 per cent to $US1,229.30 per ounce. Iron ore was down by US20c on Monday or 0.3 per cent to $US79.60 a tonne.

Ahead: In Australia, weekly consumer sentiment is released. In the US, durable goods orders and consumer confidence are released.

Savanth Sebastian is an economist at CommSec.

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